st is usually factual and verifiable. Current fair market value as established by independent appraisers. Cost, because in the event of liquidation, the assets would be sold at an amount equal to their original cost. 12. Which one of the following equations correctly expresses the relationship between assets (A), liabilities (L), revenues (R), expenses (E) and capital (C)? (a) A = L + R + E + C (b) A = C + L + (R-E) (c) A = C - (R - E) + L (d) A = (L - C) + (R - E)
st is usually factual and verifiable. Current fair market value as established by independent appraisers. Cost, because in the event of liquidation, the assets would be sold at an amount equal to their original cost. 12. Which one of the following equations correctly expresses the relationship between assets (A), liabilities (L), revenues (R), expenses (E) and capital (C)? (a) A = L + R + E + C (b) A = C + L + (R-E) (c) A = C - (R - E) + L (d) A = (L - C) + (R - E)
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...
Related questions
Question
11.
The valuation of assets in the balance sheet is based primarily upon:
What it would cost to replace the assets.
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Cost, because cost is usually factual and verifiable.
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Current fair market value as established by independent appraisers.
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Cost, because in the event of liquidation, the assets would be sold at an amount equal to their original cost.
|
12.
Which one of the following equations correctly expresses the relationship between assets (A), liabilities (L), revenues (R), expenses (E) and capital (C)?
(a) A = L + R + E + C
|
||
(b) A = C + L + (R-E)
|
||
(c) A = C - (R - E) + L
|
||
(d) A = (L - C) + (R - E)
|
13.
Which of the following would be added to net income using the indirect method?
An increase in
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An increase in prepaid expenses
|
||
|
||
A decrease in accounts payable
|
14.
Unpaid expenses may be included as an expense on the income statement.
True
False
15.
According to the rules of debit and credit for balance sheet accounts?
(a) Increase in assets, liabilities and owner equity recorded by debit
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(b) Decrease in asset and liability are recorded by credit
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(c) Increase in asset and owner’s equity are recorded by debit
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(d) Decrease in liability and owner’s equity are recorded by debit
|
16.
An increase in a liability is recorded by a credit; an increase in owners' equity by a debit.
True
False
17.
A transaction that causes an increase in an asset may also cause a decrease in another asset, an increase in a liability, or an increase in owners' equity.
True
False
18.
In a ledger, debit entries cause:
Increases in owners' equity, decreases in liabilities, and increases in assets.
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Decreases in liabilities, increases in assets, and decreases in owners' equity.
|
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Decreases in assets, decreases in liabilities, and increases in owners' equity.
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||
Decreases in assets, increases in liabilities, and increases in owners' equity.
|
19.
In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is
deducted from net income.
|
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added to net income.
|
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ignored because it does not affect income.
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ignored because it does not affect expenses.
|
20.
Fixed Assets are held by business for ______
Converting into Cash
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||
Generating Revenue
|
||
Resale
|
||
None of the above
|
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